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Sir Brendan Barber: "It's going to get better, honest" - how we can start to build trust in leadership

Friday 03 August 2018

Acas Chair, Sir Brendan Barber discusses the impact of the global financial crisis on levels of UK productivity and wage growth.

Acas Chair Brendan Barber blog Sir Brendan Barber

Sir Brendan Barber is Acas' Chair, joining in January 2014. Previously Sir Brendan was the TUC General Secretary (2003 to 2012) and sat on the Advisory, Conciliation and Arbitration Service Council (1995 to 2004). Sir Brendan was knighted in the 2013 Birthday Honours for services to employment relations.

Its ten years since the height of what is widely considered the worst global financial crisis since the Great Depression. Much has been written about the impact the crisis has had, and continues to have, on levels of UK productivity and wage growth. Another significant impact of the recession has been a worrying loss in the trust we place in leaders - not only those in charge of the economy, but also more widely leaders in business and in workplaces. This was neatly articulated in a CIPD commissioned report from Bath in 2012, entitled "Where has all the trust gone?"

A few years down the line and, if anything, the picture seems even more challenging. Recent scandals involving sexual harassment, gender pay inequality and insecure working arrangements have brought increased scrutiny on the role of leaders and raised questions about how those in positions of authority can be trusted not to abuse their power.

The new corporate governance code

A somewhat unheralded code from the Financial Reporting Council may not seem the most obvious source of hope, but it does mean that many employers will be required to aim for "long-term sustainable success" in the UK economy. Short-termism in all its forms has often been identified as one of the root causes of the 2008 crash, so it is hard to disagree with the FRC's emphasis for directors to "act with integrity, lead by example and promote the desired culture".

The revised code and accompanying guidance, which come into force for accounting periods beginning on or after 1 January 2019, require that all companies with a premium listing, whether incorporated in the UK or elsewhere, adhere to a set of core principles on a 'comply or explain' basis.

Critically it challenges company directors to demonstrate how the interests of the workforce and other stakeholders have been taken into account in their decision making. Although not going as far as some would have wanted - for example, the call for 'workers on boards' has not been met head on - it does set out clearly the value of engaging with workers. It suggests this can be achieved by using a number of possible approaches, including:

  • a director appointed by the workforce

  • a formal workforce advisory panel

  • a designated non-executive director.

This recognition of the importance of employee voice is at the heart of the 'desired culture' talked about in the new code - and it may just help with rebuilding trust in leaders and organisations. For many employees and commentators, this trust was lost because of a lack of perceived fairness at work and I note with interest that initial findings from Cardiff University's Skills and Employment Survey 2017, reveal that "the quality of jobs and social relations ... were strongly associated with perceived fairness - in particular the control people could exercise over their work tasks, the helpfulness of supervisors in providing assistance, the opportunities to participate in organisational decisions and job security."

It is also interesting that the Edelman Trust Barometer (2017) reveals that "treating employees fairly" is the top driver for building trust in companies. Many employers are latching onto this and taking pro-active measures to improve equality at work.

Let's look at just one example of where organisational narratives are going to come under increasing scrutiny.

The Gender Pay Gap

The gender pay gap is a longstanding problem which has finally been receiving the air time it deserves. The introduction earlier this year of gender pay reporting requirements, for companies with over 250 employees, is definitely a step in the right direction. But interestingly, even the emphasis here is less on taking action to address the gap and more on reporting what you find and providing a convincing narrative for where you are. Its early days, but so far, many can be forgiven for having limited faith in it being bridged and are frustrated with the time it may take (as I said in a previous blog, some analysts are suggesting it may take fifty years).

This is not to say that there's no value in the requirement to publish narratives around addressing gender pay gaps. On the contrary, prompting leaders to think about the gaps in their organisations, what's causing them, and how they might be reduced, is a necessary precursor to cultural change and effective action. But without a clear route map, how can we be sure that effective action will be taken on this long term and complex issue?

From whatever point you start in this debate, you inevitably always come back to the valuable role that employees can play in helping provide the solution, since employee voice opens the door for a democratic and fair way of addressing change.

Optimum voice mechanisms

I have spoken in the past about the need to develop an 'optimum voice mechanism' that uses a variety of channels to capture people's views. This is echoed in the FRC's guidance accompanying the Code, which talks of adopting "a combination of methods or multiple channels for engagement". My message is simple: we need to use new channels, and the tried and tested ways to create engaged workforces where long-term sustainable growth is based upon transparent decision-making and worker involvement. This might mean everything from internal social network platforms for fast-moving consultation exercises and decision-making, through to strengthening existing arrangements for collective bargaining and consultation with recognised trade unions.

A discussion paper just out from the IPPR, 'Power to the people', puts forward some recommendations for employee voice that give a nod to the past while recognising the challenges of the future. As the report states: "It is hard to escape the conclusion that the decline of trade union membership and of collective bargaining over the last four decades has contributed to a significant and growing imbalance of power in the modern economy, with a consequent decline in the share of income going to wages, and an increase in inequality."

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